The Proposed U.S.-Malaysia Free Trade Agreement

Prepared for Members and Committees of Congress

This report addresses the proposed U.S.-Malaysia free trade agreement (FTA). It provides an
overview of the current status of the negotiations, a review of the 2008 talks, an examination of
leading issues that have arisen during the negotiations, a review of U.S. interests in the proposed
agreement, a summary of the potential effects of a FTA on bilateral trade, and an overview of the
legislative procedures to be followed if the proposed FTA is presented to Congress for approval.
The proposed U.S.-Malaysia FTA is of interest to Congress because (1) it requires congressional
approval; (2) it would continue the past trend toward greater trade liberalization and
globalization; (3) it may include controversial provisions; and (4) it could affect trade flows for
certain sensitive goods and industries in the United States.
Since the U.S. Trade Representative announced on March 8, 2006, the Bush Administration’s
intent to negotiate a free trade agreement with Malaysia, eight rounds of negotiations have been
held. A proposed ninth round of talks scheduled for November 2008 were postponed until after
President Barack Obama’s inauguration once it became apparent that several outstanding issues
remained unresolved. Since the postponement, Malaysia has suspended the bilateral negotiations,
possibly in response to U.S. support for Israel’s military operations in Gaza.
Efforts in 2008 to complete the FTA negotiations by the end of the Bush Administation were
unsuccessful. There is general agreement that one major “sticking point” is Malaysia’s
government procurement policies, which give preferential treatment for certain types of
Malaysian-owned companies. Other key outstanding provisions of the possible FTA as of the end
of 2008 were intellectual property rights protection, protection of Malaysia’s agricultural and
automotive industry, and trade in services.
Areas of particular interest to U.S. exporters include a reduction of Malaysian trade barriers to
automobiles and certain agricultural products, provisions for the enforcement of intellectual
property rights, and broader access to Malaysia’s service sectors such as financial services,
telecommunications, and professional services.
Both nations could potentially see economic benefits from the proposed FTA, but there will be
both winners and losers in both nations, as well as in other nations not part of the bilateral
agreement. Overall bilateral trade flows would probably rise, possibly at the expense of some
domestic and foreign manufacturers and their workers. In 2007, the United States was Malaysia’s
largest trading partner, while Malaysia was the United States’ tenth largest trading partner. The
United States was Malaysia’s top export market and its second largest supplier of imports in


In addition, the United States may also accrue some political benefits from the proposed FTA. An
FTA with Malaysia would strengthen U.S. ties with a moderate, democratic Muslim nation. It
would also support U.S. efforts to be viewed as more engaged in Southeast Asia.
This report will be updated as circumstances warrant.

Overview of the Current Status of Negotiations..............................................................................1
Review of 2008 Negotiations..........................................................................................................2
The Seventh Round of Talks.....................................................................................................3
The Eighth Round of Talks.......................................................................................................4
The Postponement of the Ninth Round of Talks.......................................................................5
Israel’s Military Operations in Gaza and the FTA Talks...........................................................5
Key Issues........................................................................................................................................6
Intellectual Property Rights.......................................................................................................6
Automobiles and Agricultural Goods........................................................................................7
Trade in Services.......................................................................................................................9
Government Procurement.........................................................................................................9
Interests, Benefits and Potential Opposition..................................................................................10
The Potential Effects of a U.S.-Malaysia FTA..............................................................................14
The Malaysian Economy...............................................................................................................15
Bilateral Trade Flows....................................................................................................................16
Merchandise Trade..................................................................................................................16
Trade in Services.....................................................................................................................18
U.S. Investment in Malaysia...................................................................................................19
Issues for the 111th Congress.........................................................................................................19
Table 1. Selected Indicators for the Malaysian Economy.............................................................16
Table 2. U.S. Trade with Malaysia, 2000 to 2007.........................................................................17
Table 3. Malaysia’s Merchandise Exports by Top Five Trading Partners.....................................17
Table 4. Malaysia’s Merchandise Imports by Top Five Trading Partners.....................................18
Table 5. U.S. Services Trade with Malaysia and the World..........................................................18
Table 6. U.S. Foreign Direct Investment in Malaysia, 2000-2007................................................19
Table C-1. Average and Range of Malaysian and U.S. Most Favored Nation Tariff Rates...........23
Table C-2. U.S. and Malaysian Average Applied Tariffs Rates for Industrial Goods - 2006........25
Appendix A. Map of Malaysia......................................................................................................21
Appendix B. Chronology...............................................................................................................22

Appendix C. A Comparison of U.S. and Malaysian Tariff Rates..................................................23
Appendix D. U.S. Merchandise Exports to Malaysia by Two-Digit Harmonized System
Codes, 2005-2007.......................................................................................................................27
Appendix E. U.S. Merchandise Imports from Malaysia by Two-Digit Harmonized System
Codes, 2005-2007.......................................................................................................................30
Appendix F. U.S. Merchandise Exports by State to Malaysia, 2004-2006...................................33
Author Contact Information..........................................................................................................34

On March 8, 2006, then U.S. Trade Representative (USTR) Rob Portman announced and notified
Congress of the Administration’s intent to negotiate a free trade agreement (FTA) with 1
Malaysia.. At the time, then USTR Portman indicated that he thought the negotiations could be 2
completed “within a year.”
The first round of negotiations was held June 12-16, 2006, in Malaysia with at least five rounds
anticipated. Since then, eight separate rounds of talks have been held. A proposed ninth round of
talks were postponed until after President Barack Obama’s inauguration. If and when the
negotiations are completed, the proposed FTA will have to be submitted to Congress for 3
consideration if it is to go into effect.
Conserted efforts to complete the negotiations of the free trade agreement (FTA) before the end of
the Bush Administration were unsuccessful as talks foundered on a number of key issues. These
include Malaysia’s government procurement policies (which give preferential treatment to 4
bumiputera-owned companies), market access for U.S. companies into Malaysia’s services
sectors (in particular, financial services), provisions for intellectual property rights (IPR)
protection, and market access for U.S. exports of automobiles and agricultural crops. During a
media roundtable discussion in December 2008, U.S. Ambassador to Malaysia James Keith 5
indicated that there were 23 trading issues still to be resolved in the negotiations.
The FTA negotiations continued to be a controversial topic in Malaysia in 2008. An ad-hoc
meeting of senior government officials reconfirmed its support for continuing FTA negotiations
on certain topics, including government procurement, competition policy, intellectual property 6
rights, and labor conditions. However, some issues – such as rice imports – remained off the
table. In addition, the financial crisis in the United States apparently raised some concerns in
Malaysia about discussions over opening up Malaysia’s financial markets to U.S. companies.
Also, various interest groups in Malaysia – including an organization representing Malaysia’s
small and medium-sized enterprises (SMEs) – reiterated their call for the Malaysian government
to terminate the FTA negotiations, claiming that the proposed agreement would do irreparable 7
harm to thousands of Malaysia’s SMEs. In November 2008, Tony Pua of Parti Tindakan
Demokratik (Democratic Action Party, or DAP), a major opposition party, suggested the
government prepare a “white paper” outlining the details of the FTA negotiations to be presented

1 Office of the United States Trade Representative, "United States, Malaysia Announce Intention to Negotiate Free
Trade Agreement," press release, March 8, 2006.
2 “Remarks by United States Trade Representative Rob Portman and Malaysian Minister for Trade Rafidah Aziz at the
Launch of U.S.—Malaysia Free Trade Negotiations, March 8, 2007, see U.S. Trade Representative webpage— transcript.
3 Supporters of the U.S. boycott and the suspension of the FTA talks include some members of Malaysia’s parliament,
the Malaysian Bar Council, and the Malaysian Alliance of NGOs Against Oppression of Palestinians.
4 Bumiputera (also bumiputra), is a Malay term (From Sanskrit, bhumiputra, “sons of the earth”) referring to ethnic
Malays as well as other indigenous ethnic groups, such as the Orang Asli in Peninsular Malaysia and the tribal peoples
in Sabah and Sarawak. Malaysias ethnic Chinese and Indian population are not considered bumiputera.
5 "US Hopes to Conclude MUSFTA Talks Very Soon," Nanyang Daily, December 15, 2008.
6 Jane Ritikos, "Malaysia Moving Forward in FTA Talks with US," The Star, October 2, 2008.
7 Mohamad Idris, "Malaysia-US FTAStop Negotiations Immediately," Malaysiakini, July 15, 2008.

to Malaysia’s parliament to assure that the negotiation team was abiding by the agreed 8
government policies.
The future status of the proposed FTA were further complicated by Israel’s military operation in 9
Gaza. After Israel launched “Operation Cast Lead” on December 27, 2008, various political
figures and interest groups in Malaysia called for a boycott of U.S. products and the suspension of
the FTA talks to protest U.S. support for Israel’s military operations in Gaza. On January 12,
2009, Malaysia’s Minister of International Trade and Industry, Muhyiddin Yassin, said that FTA
talks with the United States were temporarily being stopped until the ministry received further 1011
instructions from Malaysia’s Cabinet. Minister Muhyiddin added that Malaysia would not be
hasty to conclude the FTA negotiations at a time when the United States was supporting “Israel’s 12
cruelty to Palestinian people.”
There have been some indications from the Obama Administration about its intentions regarding
the U.S.-Malaysia FTA negotiations. Following the U.S. presidential elections, Minister
Muhyiddin stated that the Malaysian government had been informed by representatives of the
incoming Obama Administration that negotiations would recommence sometime after the 13
inauguration. There have also been signals from President Obama that workers rights and
environmental issues will play a more prominent role in trade negotiations during his
Administration. In his announcement to nominate Ron Kirk as U.S. Trade Representative, then
President-Elect Obama stated, “As a leader, negotiator, and principled proponent of trade, Ron
will help make sure that any agreements I sign as President protect the rights of all workers, 14
promote the interests of all Americans, and preserve the planet we all share.”

At one time, there were to be three rounds of talks in 2008, to be held in January, July and
November, respectively. In the end, only two rounds of talks were held (in January and July as
planned), but the third round of talks were postponed at the request of the United States.
Following the failure to complete FTA negotiations in 2007, there was a perception in Malaysia
that the Bush Administration did not see relations with Malaysia or the conclusion of FTA
negotiations as a priority. During a press interview in December 2007, Ambassador Keith was
asked if the failure of U.S. Secretary of State Condoleezza Rice to attend ASEAN meetings, as th
well as the “low-level delegation” sent by the United States to Malaysia’s 50 National Day
celebrations, was an indication that Malaysia had “moved down the list of priorities for the U.S.

8 "MITI Opened to Proposal for a White Paper on US-Malaysia FTA," Bernama, November 19, 2008.
9 For more information on Israel’s military operations in Gaza, see CRS Report R40101, Israel and Hamas: Conflict in
Gaza (2008-2009) , coordinated by Jim Zanotti
10 "PM to Muhyiddin: Explain Statement on Suspension of FTA Talks with US," The Malaysian Insider, January 13,
11 In Malaysian culture, a person is often referred to in formal situations not by their surname, but by one of their given
names. This report will follow this convention.
12 "Rundingan FTA Dengan AS Dihentikan Sementara," Utasan (in Malay), January 12, 2009; translation provided by
U.S. Embassy in Kuala Lumpur.
13 "FTA Talks between Malaysia and US to Resume in January 2009," The Star, November 27, 2008.
14 The Office of the President-Elect, "More Members of the Economic Team," press release, December 19, 2008.

State Department.”15 Ambassador Keith reassured the press of the U.S. commitment to the region
and to Malaysia, pointing to the passage on September 17, 2007 of House Resolution 518 th
commemorating Malaysia’s 50 anniversary as evidence.
On December 30, 2007, U.S. Assistant Trade Representative Barbara Weisel confirmed that “the
U.S. continues to seek to conclude the agreement by this summer, which we believe is 16
achievable…” Weisel also said that the Bush Administration would seek an “appropriate
vehicle” to obtain congressional approval of the proposed FTA once the negotiations were 17
On January 14, 2008, Malaysia and the United States began their seventh round of formal
negotiations in Kuala Lumpur over the terms of a possible U.S.-Malaysia Free Trade Agreement.
In a statement to the press on the day the talks began, U.S. embassy spokeswoman Kathryn
Taylor said the United States was seeking “real, demonstrable progress” during the seventh round 18
of talks, but also pointed out that “there is no deadline” for completing the agreement. However,
in an interview with the press that same day, Ambassador Keith stated he was hoping that the 19
negotiations would be completed by the middle of 2008.
Assessments of the outcome of the seventh round of talks were mixed. A news story from China
reported that four key issues were discussed during the talks—investment, trade in goods and 20
services, intellectual property rights, and “legal issues.” According to Xinhua, the United States 21
was “hopeful of concluding its free trade agreement with Malaysia by this summer ... ”
Malaysia’s official news agency, Bernama, provided a similar positive assessment of the seventh
round of talks, quoting Assistant USTR Weisel, “We have largely reached the goal set for the
week. The two sides have moved significantly on a wide range of issues ... progress we made this 22
week is encouraging.” The New Straits Times of Malaysia published a similar story on the talks
on January 18, 2008, referring to the progress that had been made and possibility of concluding 23
the negotiations by summer.
Press accounts of the status of the FTA talks turned less optimistic a few days later. On January
24, 2008, Bernama printed two separate stories on the FTA negotiations. The first article reported
that then Minister of International Trade and Industry Rafidah Abdul Aziz saw no need for a 24
deadline for concluding the trade talks. The second article stated that Ambassador Keith had
indicated that if the FTA with Malaysia were not completed by the end of July, the United States

15 Oorrjitham, op cit.
16 Rupa Damodaran, Malaysia-US FTA Talks to Resume on January 14,” Business Times, December 30, 2007.
17 Ibid.
18 “After 1-year Hiatus, Malaysia and US Resume FTA Talks,The Times of India, January 14, 2008.
19 Kevin Tan, “US Hopeful of FTA with M’sia by Mid-year,” The Edge Daily, January 24, 2008.
20U.S., Malaysia Make Progress in Trade Talks, Xinhua, January 18, 2008.
21 Ibid.
22US Aims to Conclude FTA by Summer, Insists on Government Procurement,” Bernama, January 17, 2008.
23 Anna Maria Samsuddin, “US, Malaysia Make Progress in Trade Talks: Weisel,” New Strait Times, January 18, 2008.
24 “No Need for Deadline to Conclude Malaysia-US FTA, Says Rafidah,Bernama, January 24, 2008.

would focus its attention on other FTA agreements.25 Ambassador Keith was quoted as saying,
“We will turn our attention to seal the pacts with South Korea and Columbia before the end of the 26
Bush Administration. There will be no hard feelings.”
Another negative sign about the status of the negotiations was the lack of a decision on the date
and place to hold the next round of talks. The United States stated that there was agreement on
“the next steps”—communicating on a full set of issues still to be resolved and setting the dates 27
for the next round of talks. However, Minister Rafidah reportedly said on the status of the
negotiations, “Whatever issues that can be cleared first, they have cleared. We don’t have to meet 28
The eighth round of negotiations were held in Washington, DC on July 14 – 18, 2008. Heading
the Malaysian delegation was the Secretary General of the Minister of International Trade and
Industry (MITI), Abdul Rahman Mamat. The chief negotiator for the U.S. government was
Assistant USTR Weisel. The negotiations focused on the topics of six working groups addressing
trade in agricultural goods, trade in services, investment, IPR, sanitary and phytosanitary (SPS)
measures, and legal provisions.
Political events in both nations overshadowed the negotiations. The upcoming U.S. presidential
elections and the resulting change in administration influenced the talks, as did the the poor 29
showing of the ruling Barisan Nasional (BN) in Malaysia’s general elections of March 8, 2008.
In addition, the uncertain status of the proposed U.S. FTAs with Colombia and South Korea may
have had an impact on the talks. While the Bush Administration has expressed a desire to
conclude the negotiations prior to the end of its term, the Malaysian government had indicated
that it saw no need to rush to conclude the talks in 2008.
For the United States, the key issue for the July 2008 talks was greater foreign access to
Malaysian government procurement contracts. According to Malaysia, while the topics of
competition policy, environment, labor, and financial services could be discussed, any agreement 30
reached on these topics would be non-binding. Other areas under discussion were market access
for U.S. agricultural exports and service providers. Prior to the meetings, the newly-appointed
Minister of International Trade and Industry, Muhyiddin Yassin, stated that Malaysia would not 31
compromise in “several sensitive areas, such as agriculture.” Malaysia has specifically excluded
rice from consideration in the FTA negotiations.

25US to Sign FTA with Other Countries if Talks with Malaysia Fail,” Bernama, January 24, 2008.
26 Ibid.
27US Aims to Conclude FTA by Summer, Insists on Government Procurement,” Bernama, January 17, 2008.
28 “No Need for Deadline to Conclude Malaysia-US FTA, Says Rafidah,Bernama, January 24, 2008.
29 For more information on Malaysias general elections of 2008, see CRS Report RL33878, U.S.-Malaysia Relations:
Implications of the 2008 Elections, by Michael F. Martin.
30 Mohd Arshi Mat daud, "9th Round of Malaysia-US FTA Talks in November, Says Muhyiddin," Bernama, July 24,
31Free Trade Pact with US: No Compromise in Sensitive Areas,” The Malaysian Insider, May 26, 2008.

There were indications of some progress during the eighth round of negotiations. In a press
statement following the talks, MITI indicated that the two nations were “exploring possibilities of
business collaboration and capacity-building in the services sector within the framework of the 32
Malaysia-U.S. FTA.” Assistant USTR Weisel said that the United States hoped that Malaysia’s
proposed reforms of its government procurement process may help advance FTA negotiations on 33
the issue. U.S. hopes received some encouragement in October 2008, when Minister Muhyiddin
announced that Malaysia’s Cabinet had indicated its willingness to move government
procurement from the list of “no talk” issues to one where non-binding discussions would be 34
The Malaysian Institute of Economic Research (MIER) observed after the July 2008 negotiations
that the United States had adopted a “pragmatic approach,” possibly due to its problems with its
proposed FTAs with South Korea and Thailand. MIER Executive Director Mohamed Ariff Abdul 35
Kareem indicated, however, that the U.S. tendency to use its FTA with Singapore as a model in 36
other negotiations is causing problems in its talks with Malaysia.
Plans to hold the ninth round of negotiations in late 2008 were postponed following the U.S.
presidential elections. In July 2008, Minister Muhyiddin announced that the ninth round would be 37
held in Kuala Lumpur in November 2008. However, on November 7, 2008, Deputy Prime
Minister Najib Razak said, “Malaysia was not able to conclude the FTA with the present U.S.
administration,” and that Malaysia will have to wait to see the policies of the new Obama 38
Administration. On November 26, 2008, Minister Muhyiddin told an audience of Malaysian
manufacturers that he had been told by the U.S. government that it wanted to postpone further 39
negotiations on the FTA until after the Obama Administration was in place. On December 15,

2008, U.S. Ambassador Keith, stated that the United States was interested in concluding the FTA 40

negotiations “as early as possible in the new administration.”
As a predominantly Muslim nation, Malaysia has a long history of support for what it sees as the
Palestinian peoples’ struggle for freedom from Israeli oppression. The day after Israel began
Operation Cast Lead, Malaysia’s Prime Minister Abdullah Ahmad Badawi said in an official
statement, "Malaysia deplores the disproportionate use of military power by Israel against the 41
people of Gaza." The following day, the Ministry of Foreign Affairs (MoFA) issued a statement

32 Rupa Damodaran, “Some Compromise in Malaysia-U.S. Trade Talks?,” Business Times, July 22, 2008.
33 Ibid.
34 "KL to Discuss Procurement in US FTA Talks," Malaysian Insider, October 1, 2008.
35 For more information in the U.S. FTA with Singapore, see CRS Report RL34315, The U.S.-Singapore Free Trade
Agreement: Effects After Three Years, by Dick K. Nanto
36 "US Adopts Pragmatic Approach in FTA Talks: MIER," Bernama, July 22, 2008.
37 Mohd Arshi Mat Daud, "9th Round of Malaysia-US FTA Talks in November," Bernama, July 24, 2008.
38 Hamidah Atan, "PM Hopes to See Fairer Trade Ties with US," New Strait TImes, November 7, 2008.
39 "US Wants to Hold Back FTA Talks with Malaysia for a While," Bernama, November 26, 2008.
40 "US Keen to Conclude FTA with Malaysia," Bernama, December 15, 2008.
41 "PM Condemns 'Disproportionate' Israeli Military Action," Malaysiakini, December 29, 2008.

that Malaysia “strongly condemns” Israel’s military actions in Gaza asserting that “there is no 42
excuse for the disproportionate, indiscriminate and excessive use of force in Gaza…”
In the weeks following, popular opposition in Malaysia to Israel’s military operations in Gaza
grew and its focus spread to include the United States. Calls for a boycott of U.S. goods and
services emerged from various sources within Malaysia, including former Prime Minister 43
Mahathir Mohamad, members of parliament, political parties and public interest groups.
Specific U.S. boycott targets include Coca Cola, KFC, McDonalds, and Starbucks. There are also
anti-boycott voices in Malaysia who claim that the boycott will hurt Malaysian-owned businesses
and workers more than the parent U.S. companies.
On January 10, 2009, the Malaysian Bar Council urged a “review” of the FTA negotiations with
the United States to protest what was seen as U.S. support for “Israeli atrocities against 44
Palestinians.” Other groups also called for the suspension of FTA talks. Two days later, Minister
Muhyiddin stated that the Ministry of International Trade and Industry (MITI) was suspending 45
the FTA negotiations until it received orders and guidance from Malaysia’s Cabinet. There were
indications that MITI’s decision was at least partially in response to the events in Gaza. The next
day, Prime Minister Badawi requested that Minister Muhyiddin formally brief the Cabinet of the 46
decision to suspend the FTA talks. On January 15, 2009, Minister Muhyiddin indicated that the
FTA negotiations had been postponed at the request of the United States until after the
presidential inauguration. He also said in regards to the proposed boycott of U.S. products, “If
there are any Malaysians who want to take such an action, it is their right. As for the government, 47
we have not taken any decision on the matter.”

Over the last three years, several issues have emerged as difficult topics in the negotiations. The
main topics still to be resolved include intellectual property rights (IPR) protection, market access
for U.S. automobiles and agricultural goods in Malaysia, trade in services, and government
procurement policies.
An issue of interest to many U.S. exporters, and in particular software and pharmaceutical
companies, is Malaysian IPR regulations and enforcement. Malaysia has recently tightened its
laws on and stepped up enforcement of protection of intellectual property, but problems still

42 "Malaysia Condemns Israel's Air Strikes in Gaza," Bernama, December 29, 2008.
43 "Gaza Prompts Boycott in Malaysia," BBC News, January 9, 2009.
44 "Review FTA Negotiations with United States," Bernama, January 10, 2009.
45 "Rundingan FTA Dengan AS Dihentikan Sementara," Utasan (in Malay), January 12, 2009; translation provided by
U.S. Embassy in Kuala Lumpur.
46 "PM to Muhyiddin: Explain Statement on Suspension of FTA Talks with US," The Malaysian Insider, January 13,
47 "US Postponed US-Malayia FTA Talks," Bernama, January 15, 2009.

remain. The Business Software Alliance (BSA) estimated 59% of the software in Malaysia in 48

2007 was pirated, resulting in industry losses of $311 million.

Malaysia has remained on the Special 301 Watch List since October 2001 as part of an effort by
the USTR to monitor Malaysia’s efforts to improve its IPR regime. In its 2008 Special 301
Report, the USTR stated that “Malaysia continued to show a strong commitment to strengthening
IPR protection and enforcement this past year, but still needs to make further IPR 49
improvements. IPR enforcement improvements during 2007 included the creation of a
specialized IPR court, which began hearing cases in 2007. The USTR also stated that it would be 50
“pressing IPR issues through the ongoing U.S.-Malaysia Free Trade Agreement negotiations.”
With regard to IPR protection for pharmaceuticals, Malaysia is concerned about the U.S. 51
preference for “TRIPs plus” provisions in the U.S.-Malaysia FTA. The United States reportedly 52
would like tighter restrictions on the use of compulsory licensing (CL) and wishes to include 53
data exclusivity provisions in the FTA.
Malaysia is reluctant to accept terms that would undermine its ability to utilize the CL provisions
of TRIPs for drugs deemed necessary to prevent the spread of an epidemic or avoid a national
health emergecy. Opposition has appeared in Malaysia among people concerned about the
treatment of HIV/AIDS. They claim that a U.S.-Malaysia FTA would more than likely patent
anti-retroviral AIDS drugs for five years, “making [them] far too costly for them [HIV/AIDS 54
patients] to buy.” Others believe that stricter enforcement of drug patents could discourage 55
pharmaceutical companies from introducing new anti-retroviral drugs in Malaysia. Malaysia has
used the CL provisions of TRIPs to provide low-cost anti-retroviral drugs to HIV/AIDS patients
in Malaysia.
Malaysia has a growing automobile industry. For many years, the Malaysian government has
promoted the development of a domestic automobile industry as a sign of its emergence as a
modern industrial nation. Its automobile manufacturers, such as Proton and Perodua, market their
vehicles in over 40 countries around the world, and its motorcycle manufacturer, Modenas, is a
popular brand in Argentina, Greece, Iran, Singapore, Malta, Mauritius, Turkey, and Vietnam.

48 Business Software Alliance, Fifth Annual BSA and IDC Global Software Piracy Study, Washington, D.C., June 19,
49 Office of the U. S. Trade Representative, 2008 Special 301 Report, Washington, D.C., April 25, 2008, p. 42,
http://www.ustr.go v/assets/Documen t_Library/R eports_Publications/200 8/20 08_Special_301_Rep ort/asset_upload_file
50 Ibid.
51 TRIPs refers to the 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights. For more information
on TRIPs, TRIPs plus, and FTAs, see CRS Report RL34292, Intellectual Property Rights and International Trade, by
Shayerah Ilias and Ian F. Fergusson.
52 For more on the CL provisions of TRIPs, see CRS Report RL33750, The WTO, Intellectual Property Rights, and the
Access to Medicines Controversy, by Ian F. Fergusson.
53 For an explanation of data exclusivity and its inclusion in FTAs, see CRS Report RL33288, Proprietary Rights in
Pharmaceutical Innovation: Issues at the Intersection of Patents and Marketing Exclusivities, by John R. Thomas.
54 Soon Li Tsin, “People with HIV/AIDS Hold Anti-FTA Protest,” Malaysiakini, January 11, 2007.
55 Dass, Maria J. Groups Worried Over FTA with US. Sun2Surf, September 11, 2006.

Malaysia’s automobile components and parts industry is also quite successful on the world
Malaysia has long protected its automobile manufacturing industry from foreign competition
using high tariffs and non-tariff trade barriers. Government policies also distinguish between
national cars (i.e., made by domestic producers, such as Proton and Perodua) and non-national
cars, which include most vehicles manufactured in Malaysia by non-Malaysian owned firms. The
firms making national cars, for example, receive 50% rebates on their excise taxes. Bumiputera
also are favored in receiving permits to import or distribute motor vehicles.
The government has, however, begun to dismantle some of its protections in order to meet its
commitments to the WTO and the ASEAN Free Trade Agreement. In January 2004, the
government completely eliminated local content requirements that were inconsistent with its
obligations under the WTO, but government policies (particularly its excise taxes on automobiles)
continue to block open trade in the automotive sector. Malaysia imposes 30% tariffs on
assembled vehicles from outside the ASEAN region and up to 10% on completely knocked-down
vehicle kits. Excise taxes on both assembled vehicles and kits are 80-200% on automobiles, 55-56

160% on multipurpose vehicles, and 20-50% on motorcycles.

During negotiations, Malaysia is likely to raise the issue of U.S. measures protecting its domestic
automobile industry. For example, the United States currently maintains a special 25% tariff on
imports of pickup trucks. At a May 2006 Trade Policy Staff Committee hearing, a representative
of the U.S. Automotive Trade Policy Council (ATPC), which represents the U.S. big three
automakers, said the Council supports the proposed FTA and sees it as an opportunity to break
into a market that has historically protected domestic producers and discriminated against foreign 57
From the outset of the negotiations, Malaysia has stated that rice was considered “strategic crop”
and would not be included in the FTA and that tariffs on other agricultural goods (such as poultry)
would not be lowered in order to protect its “farmers, planter, and fishermen.” On November 13,
2008, Minister of Agriculture and Agro-based Industry Mustapa Mohamad said that Malaysia was
“steadfast” in its decision to designate rice as a “strategic crop” that would not be included in any
FTA with the United States. Malaysia has also expressed concerns about U.S. SPS regulations, 58
which have been criticized by several nations as forming a non-tariff trade barrier. The United
States reportedly continues to press Malaysia to remove or reduce its restrictions on the trade of
agricultural goods.
Trade in agricultural goods was reportedly discussed during the July 2008 talks, including SPS

56 U.S. Trade Representative. 2007 National Trade Estimate Report on Foreign Trade Barriers, April 7, 2007. Section
on Malaysia.
57 A copy of the ATPC’s testimony is available online at
58 For more information on foreign objections to U.S. SPS regulations, see CRS Report RL33472, Sanitary and
Phytosanitary (SPS) Concerns in Agricultural Trade, by Geoffrey S. Becker.

Financial services also appear to be a difficult issue to resolve in the negotiations. Malaysia limits
foreign ownership to 30% of commercial banks and 49% of investment banks. Foreign
commercial banks also are allowed to open new branches only if they also add other branches as
directed by Bank Negara, Malaysia’s central bank. Malaysia maintains a 51% cap on foreign
ownership of insurance companies already established in Malaysia prior to 1998 as well as a
foreign ownership limit of 30% for new entrants seeking access. Malaysia has not enforced the 59

51% cap except in cases of companies who seek the right to establish branches.

In the lead-up to the launch of the FTA negotiations, Malaysia reportedly attempted to keep
financial services out of the negotiations completely, but the country did agree to include such
services in the FTA talks. Malaysia, however, has lifted requirements that foreign banks obtain
50% of their credit from local banks, has allowed them to seek any amount of ringgit (the
domestic currency) credit without approval, has allowed the ringgit exchange value to float rather
than be strictly pegged to the dollar, and allowed foreign banks to open four additional branches 60
in 2006. However, the recent financial crisis in the United States has reignited concerns in
Malaysia about the risks associated with greater foreign participation in its financial sector.
In telecommunications, foreign companies are allowed to acquire up to a 30% equity stake in
existing fixed line operations. Value-added telecommunications service suppliers likewise are
limited to 30% foreign equity. These restrictions arguably benefit the government-controlled firm, 61
Telekom Malaysia.
Licensed professionals, such as lawyers and architects, also are restricted in Malaysia. Foreign
lawyers may not practice Malaysian law nor affiliate with local firms. Foreign law firms may take
an operating stake of up to 30% in a local law firm. A foreign architectural firm may operate in
Malaysia only as a joint venture participant in a specific project, and foreign architects may not
be licensed in Malaysia. Foreign engineers may be licensed only for specific projects. Foreign 62
accounting firms must work through Malaysian affiliates.
In services, the United States has used the negative list approach in determining which sectors are 63
excluded from the agreement. Malaysia prefers to use a positive list approach in which service
sectors are excluded unless listed in the agreement.
Malaysia is not a signatory of the WTO Government Procurement Agreement. As part of its
“New Economic Program,” Malaysia seeks to raise the participation of bumiputera in the
economy. Foreign companies, in many cases, are required to take on a local partner before their

59 U.S. to Face Difficulties on Financial Services in Malaysia FTA Talks, Inside U.S. Trade, March 10, 2006.
60 U.S. Trade Representative. 2007 National Trade Estimate Report on Foreign Trade Barriers, March 31, 2007.
Section on Malaysia.
61 Ibid.
62 Ibid.
63 The negative list of sectors closed to foreign investment, for example, may include airports, social insurance, or other
sectors that are run by governments or have special security requirements.

bids are considered. The awarding process for procurement contracts also is considered to be non-64
After the second round of negotiations in July 2006, it became apparent that Malaysian
government procurement restrictions that reserve a certain share of Malaysian business for
bumiputera were emerging as a major sticking point in the negotiations. Malaysian negotiators
reportedly had not been authorized by the Malaysian Cabinet to agree to an opening of the 65
government procurement market.
In addition, there is strong interest in segments of the Malaysian business community to obtain 66
preferential access to the U.S. government procurement process. Tan Sri Yong, president of the
Federation of Malaysian Manufacturers (FMM), commented, “At the moment, Malaysian
companies cannot access the American government procurement, which is 65 times larger than 67
ours. This means our furniture and computers cannot be supplied to the U.S. government.”
The United States has apparently offered limited access to its government procurement – the
opportunity to bid on approximately $250 billion in contracts – to keep the comparative value of
market access proportional. The Malaysia government procurement market has an estimated
value of approximately $20 billion.
The government procurement issue was apparently not a major topic of negotations during the
two rounds of talks held in 2008.Following the January 2008 round of negotiations, U.S.
Assistant Trade Representative Weisel reported that the government procurement was not 68
discussed because the Malaysian government was reviewing its position.

The proposed U.S.-Malaysia FTA is of interest to Congress because: (1) it requires congressional
approval; (2) it would continue the past trend toward greater trade liberalization and
globalization; (3) it may include controversial provisions; and (4) it would affect certain trade
flows that would, in turn, affect U.S. businesses or farmers, particularly import-competing
industries and those exporting to Malaysia.
Among the initial responses to the USTR’s 2006 FTA announcement were a statement by Senator
Max Baucus welcoming the agreement, and statements by Representatives Jim Kolbe and Dan 69
Burton hailing the launch of the negotiations. The National Association of Manufacturers

64 Ibid.
65 Government Procurement Emerging as Major Problem in U.S.-Malaysia FTA. Inside US Trade, September 1, 2006.
66 Malaysia’s computer manufacturers – including facilities owned by U.S. companies – are apparently particularly
interested in access to the U.S. government procurement market.
67 Rupa Damodaran, “Manufacturers: US FTA Talks Could be Faster,” New Strait Times, December 17, 2007.
68 Kevin Tan, "Procurement Left Out in FTA Talks," The Edge Daily, January 18, 2008.
69 Office of Senator Max Baucus. Baucus Welcomes Launch of U.S.-Malaysia Free Trade Talks, Press Release, March
8, 2006. Office of Congressman Jim Kolbe. Kolbe Hails Free Trade Negotiations with Malaysia, Press Release, March
9, 2006. Office of Congressman Dan Burton. Vice-Chairman Burton Comments on the Launch of the United States-
Malaysia Free Trade Agreement, March 7, 2006.

indicated that it has been a leading advocate of an FTA with Malaysia,70 and a U.S.-Malaysia Free 71
Trade Agreement (FTA) Business Coalition was organized on March 8, 2006. Objections to the
proposed FTA have come from some Malaysian and U.S. labor unions, farmers, fishermen and 72
Malaysia plays into U.S. interests through its economy and trade; its role in countering radical
Islamic organizations; the example it sets as a democratic secular Muslim state; its position as a
member of ASEAN, Asia Pacific Economic Cooperation (APEC), and other multilateral fora; its
shared interest in dealing with a rising China; and the common goal of securing a safe shipping 73
channel through the Strait of Malacca.
A U.S.-Malaysia FTA was part of the Bush Administration’s strategy to press for regional and
bilateral trade initiatives in order to “ignite a new era of global economic growth through free 74
markets and free trade.” In a broader sense, the proposed FTA would be a step toward
realization of APEC’s “Bogor Vision,” under which the United States and APEC’s other 21
members are working toward “free and open trade in the Pacific.” At the 2006 APEC meetings,
the United States proposed that APEC consider forming a Free Trade Area of the Asia Pacific that 75
would accomplish this goal. With the Doha Round of multilateral trade talks under the World
Trade Organization (WTO) encountering problems, some see FTAs as a plausible alternative.
When announcing the proposed negotiations, the USTR listed four major goals associated with a
U.S.-Malaysia FTA. These were: (1) to create new opportunities for U.S. manufacturers, farmers,
and service providers; (2) to strengthen U.S. competitiveness and generate high-paying jobs; (3)
to strengthen U.S. economic partnerships in the region; and (4) to advance broader U.S. strategic 76
goals. Other benefits mentioned for the proposed FTA included: (5) to cement a vibrant U.S.-
Malaysia economic relationship; (6) to increase U.S. exports; (7) to diversify U.S. exports; (8) to
increase investment; (9) to increase the sharing of knowledge and know-how between U.S.
companies and Malaysian companies; (10) to enhance economic growth and job creation; and 77
(11) to lower costs and create more competitive companies.
In Malaysia, the Ministry of International Trade and is leading the negotiations. The Ministry lists
as its FTA objectives to: (1) seek better market access for Malaysian goods and services; (2)
further facilitate and promote bilateral trade and investment flows as well as economic
development; (3) enhance the competitiveness of Malaysian producers and exporters through

70 National Association of Manufacturers. Testimony of Christopher Wenk before the Trade Policy Staff Committee,
Office of the U.S. Trade Representative, onProposed United States-Malaysia Free Trade Agreement,” May 3, 2006.
71 The web page for the U.S.-Malaysia Free Trade Agreement (FTA) Business Coalition is
US-Malaysia%20FTA/index.asp. The Secretariat for the US-Malaysia Free Trade Agreement Business Coalition is the
US-ASEAN Business Council.
72 The website, “FTA Malaysia,” is a nexus for information provided by groups,
organizations and individuals opposed to the U.S.-Malaysia FTA.
73 For more information on U.S.-Malaysia relations, see CRS Report RL33878, U.S.-Malaysia Relations: Implications
of the 2008 Elections, by Michael F. Martin.
74 The White House. National Security Strategy of the United States. March 2006, part VI.
75 See CRS Report RL31038, Asia Pacific Economic Cooperation (APEC) and the 2007 Meetings in Sydney, Australia,
by Michael F. Martin.
76 Office of the United States Trade Representative. Free Trade Agreement: U.S.-Malaysia. Trade Facts, March 2006.
77 Remarks by Ambassador Karan K. Bhatia, Deputy U.S. Trade Representative, Press Conference on the U.S.-
Malaysia Free Trade Agreement, Kuala Lumpur, Malaysia, March 17, 2006.

collaboration; and (4) build capacity in specific targeted areas thorough technical cooperation.
The Ministry also views the proposed FTA as comprehensive and covering liberalization of the
goods and services sector; trade and investment promotion and facilitation activities; investment
protection; economic and technical cooperation programs; and having appropriate flexibility to 78
facilitate development objectives. The Ministry also noted that it would seek “flexibility and 79
longer phase-in periods for sensitive sectors.”
Several Malaysian industries have been generally supportive of the proposed FTA, principally
because they believe that they will benefit from greater access to the U.S. market. Among these
industries are clothing and textiles, ceramics, lumber, rubber and consumer electronics. In
addition, Malaysia hopes the FTA will increase inward foreign direct investment (FDI) from the
United States and other nations because of Malaysia’s improved access to the U.S. market.
A U.S.-Malaysia FTA would also improve U.S. access to the economies of Southeast Asia.
Malaysia already has FTAs with Indonesia, Brunei, Singapore, the Philippines, and Vietnam
under the ASEAN free trade area, and ASEAN is nearing completion of an FTA with India. It has
FTAs with South Korea and Pakistan, an economic partnership agreement with Japan covering
most goods trade, a partial FTA with China, and it is negotiating FTAs with Australia and New
Zealand, and discussing an FTA with India. On April 19, 2007, Chile and Malaysia announced
they would start negotiations on the establishment of a bilateral FTA in June, with the first round 80
of talks held in Kuala Lumpur.
When announcing the initiation of FTA negotiations, the USTR indicated that via the proposed
FTA, the U.S. government is hoping to further build the broader relations with a country that has
been on the “forefront of Asia’s economic transformation and is a leader in the region and
beyond.” The USTR hoped that this FTA would strengthen U.S. cooperation with Malaysia in
multilateral and regional fora, reinforce a strong U.S.-ASEAN relationship, and advance U.S. 81
commercial and strategic interests in Asia.
As a moderate, democratic Muslim nation, Malaysia plays a strategic role in U.S. foreign policy.
In 2005, Prime Minister Abdullah urged Muslims around the world to guard against extremism 82
and improve ties with the West while promoting his nation’s moderate version of Islam. The
Bush Administration also hoped that the proposed FTA would reinforce the shared interests of the
United States and Malaysia, promote common values, and facilitate cooperation in 83
counterterrorism, defense, counter-narcotics, education, and in other areas. Malaysia (along with
Indonesia, Singapore, and Thailand) plays a key role in protecting vital maritime shipping lanes
in the Strait of Malacca from pirates and terrorism.
In the United States, opposition to the proposed FTA has emerged from labor unions and
environmental protection organizations, as well as “anti-globalization” groups. In Malaysia,

78 Malaysia. Ministry of Trade and Industry. Malaysia-US Free Trade Agreement. Media Release. May 3, 2006.
79 Malaysia. Ministry of Trade and Industry. “Joint Announcement To Launch Negotiations For A Malaysia United
States Free Trade Agreement, 8 March 2006, Washington D.C.Media Release, March 13, 2006.
80Chile and Malaysia to Start FTA Talks,” Prensa Latina, April 19, 2007.
81 Weisel, Barbara. Opening Remarks, Public Hearing, U.S.-Malaysia FTA, Washington, DC, May 3, 2006.
82 “Malaysia PM Abdullah Warns Muslims Against Extremism.” Voice of America. January 27, 2005. See also CRS
Report RL31672, Terrorism in Southeast Asia, coordinated by Bruce Vaughn.
83 Weisel, Barbara. Opening Remarks, May 3, 2006. Op. cit.

voices opposing the FTA have arisen from labor unions, farmers, fishermen and other groups, as
well as from opposition political parties. In some cases, opponents to a U.S.-Malaysia FTA from 84
both nations have formed coalitions.
With respect to labor interests, the AFL-CIO opposes additional FTAs unless they contain
meaningful protections for workers’ rights and environmental standards. Its position is that the
Bush Administration launched or concluded bilateral free trade agreements that include no
enforceable protections for core workers’ rights, and move “backwards from previous accords on
workers’ rights, and contain many of the same flawed rules that have worsened our trade deficit” 85
under the North American Free Trade Agreement (NAFTA). Labor organizations also are
interested in ensuring that labor laws in the bilateral trading partner country are brought up to
International Labor Organization (ILO) standards and that a dispute settlement or enforcement
mechanism is included in agreements that would preclude partner countries from reversing labor
gains or weakening labor laws following congressional approval and implementation of their 86
respective FTAs. During the presidential campaign, Barack Obama expressed some support for
the labor unions’ concerns about the labor provisions of the negotiated FTAs with Colombia and
South Korea.
Labor conditions in Malaysia have been the subject of some international criticism. According to
Malaysian law, workers are afforded a variety of rights and most workers have the right to engage
in trade union activity. However, according to the latest U.S. State Department country report on 87
Malaysia, only 9.5% of the labor force was represented by trade unions. In addition, Malaysian
trade union officials report extended delays of up to four years in obtaining legal recognition of
their union. A specific area of international concern has been the working conditions of
Malaysia’s estimated 2.5 million immigrant workers—most from Indonesia—who reportedly face 88
abuse and exploitation by employers and recruitment agencies.
There has also been organized opposition to a U.S.-Malaysia FTA from Malaysians. On January
11, 2007, an anti-FTA campaign in northern Malaysia resulted in petitions with over 20,000
farmer and fishermen signatures being submitted to Malaysia’s Prime Minister Abdullah and
Malaysia’s Ministry of International Trade and Industry. The petitions state that the proposed FTA 89
would harm Malaysia’s rice farmers and fishing industry. In October 2006, a coalition of
opposition parties, workers, and small businesses in Malaysia called for the cessation of

84 The AFL-CIO and the Malaysian Trades Unions Congress signed a joint declaration regarding a U.S.-Malaysia FTA
on January 22, 2007, in Kuala Lumpur, stating that any agreement “must result in broadly shared benefits to working
people and communities, not simply extend and enforce corporate power and privilege.” For more details, seeU.S.
Unions Oppose Free Trade with Malaysia,” by Anil Netto, Inter Press Service News Agency, January 22, 2007.
85 AFL-CIO. Issue Brief: The Bush Record on Shipping Jobs Overseas. August 2004. See also: Testimony of Thea M.
Lee, Policy Director, American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), before the
House of Representatives Committee on Ways and Means, Hearing on the Implementation of the United States-Bahrain
Free Trade Agreement, September 29, 2005.
86 See, for example, Testimony of Thea M. Lee, Policy Director, AFL-CIO, before the Subcommittee on International
Trade of the Senate Committee on Finance in a Hearing on the Implementation of the United States-Oman Free Trade
Agreement, March 6, 2006.
87 U.S. Department of State. Bureau of Democracy, Human Rights, and Labor. Country Reports on Human Rights
Practices—2007, Malaysia. March 11, 2008.
88 For more information on the condition of immigrant workers in Malaysia, see Human Rights Watch report on
Malaysia at
8920,000 Fishermen, Farmers Protest Against FTA, by Fauwaz Abdul Aziz, Malaysiakini, January 10, 2007.

negotiations with the United States until a study of the economic and social impact of the 90
proposed FTA was conducted.
Opposition to an FTA also may arise from various special interest groups. For example, Public
Citizen, a nonprofit consumer advocacy organization in the United States, maintains that the FTA
with Central America is “based on the same failed neoliberal NAFTA model, which has caused
the ‘race to the bottom’ in labor and environmental standards and promotes privatization and 91
deregulation of key public services.” In Malaysia, people concerned about the cost of
pharmaceutical drugs, especially treatment for HIV/AIDS, are opposed to possible provisions in 92
the FTA that they believe will raise the cost of prescription drugs in Malaysia.
Another possible issue complicating the negotiations could be U.S. relations with Israel. Malaysia
currently does not have diplomatic relations with Israel and requires export licenses for all goods
sent to Israel. U.S. law currently contains several provisions designed to undermine official 93
boycotts and trade embargoes aimed at Israel. As previously mentioned, U.S. support for Israel’s
military operations in Gaza have given rise to a boycott of U.S. products and calls to suspend the
FTA negotiations.
During recent congressional consideration of other proposed FTAs, opposition concerns have
been addressed either in the implementing legislation or by securing various commitments in
writing from the Administration. For example, in congressional consideration of the Dominican
Republic-Central America-United States Free Trade Agreement (DR-CAFTA), the Bush
Administration assuaged opposition from labor, sugar, and textile interests by promising certain
actions to ameliorate adverse effects of the proposed FTA. In a letter, the Administration
promised to allocate $40 million of FY2006 foreign operations appropriations for “labor and
environmental enforcement capacity building assistance,” and to continue to request this level of
funding in budgets for fiscal years 2007 through 2009. The Bush Administration also stated that it
would not allow the DR-CAFTA to interfere with the operation of the sugar program through
FY2007 as the program is defined in the Farm Security and Rural Investment Act of 2002. For the
textile and apparel industry, promises were made related to rules of origin, stricter customs
enforcement with respect to Mexican inputs used in DR-CAFTA textile and apparel products, and 94
actions to increase use of U.S. fabric.

The usual goal of free trade agreements is to reduce barriers to trade and investment. In addition
to eliminating or reducing tariffs on both sides, FTAs often eliminate or reduce import quotas and
other non-tariff barriers to trade. They also usually provide access to services, open markets for
investment, contain provisions strengthening protection of intellectual property, address certain

90Malaysians Concerned Over Possible Free Trade Agreement with US,” by Joseph Masiliamany, AsiaNews, October
10, 2006.
91 Public Citizen. Global Trade Watch. CAFTA: Part of the FTAA Puzzle.
92People with HIV/AIDS Hold Anti-FTA Protest,” by Soon Li Tsin, Malaysiakini, January 11, 2007; “US FTA: Will
We Lose Out, Too? by Jacqueline Ann Surin, The Sun, January 11, 2007.
93 See CRS Report RL33961, Arab League Boycott of Israel, by Martin A. Weiss.
94 See CRS Report RL31870, The Dominican Republic-Central America-United States Free Trade Agreement
(CAFTA-DR), by J. F. Hornbeck.

types of government regulations and practices, provide for a dispute settlement process, and can
touch on issues such as business visas, competition policy, and a variety of policies or practices
that affect economic activity.
FTAs also create winners and losers. In general, the ones who gain from FTAs tend to be
exporters, investors, and consumers, while those who lose tend to be companies and workers in
import-competing industries. In addition, non-party countries could the FTA can be affected by 95
the terms of the agreement, as trade is created or diverted between nations.
An FTA with Malaysia would be the third FTA negotiation by the United States with a Southeast
Asian nation, following the U.S.-Singapore FTA that came into effect on January 1, 2004, and a
proposed U.S.-Thailand FTA whose negotiations are currently stalled. The United States also has
an FTA with Australia and is negotiating an FTA with South Korea. On May 10, 2004, the United 96
States and Malaysia signed a Trade and Investment Framework Agreement.
Past FTAs negotiated by the United States usually provide for tariff free trade between the two
countries with a phase-in period for sensitive sectors. With Malaysia, some trade already is tariff 97
free. Both the United States and Malaysia participate in the Information Technology Agreement
(ITA) under which tariffs on semiconductors and other information technology products are
bound at zero. The majority of current U.S. exports to Malaysia are covered by this agreement.
Semiconductors and parts for computers alone account for more than half of U.S. exports to
Malaysia. An FTA, however, would open markets artificially restricted by tariff and non-tariff
barriers. Many of the more competitive U.S. exports face relatively high duties in Malaysia.
These include products such as motor vehicles and parts, off-road dumpers, polyethylene, 98
motorcycles, and adhesives. For more information on the relative tariff rates of the two nations,
see Appendix C.
The potential impact of an FTA depends on various other factors, including the relative size of the
two nations, the amount and nature of their bilateral trade flows, the size of bilateral FDI in each
nation, as well as existing trade relations with other nations. Below is a summary of key aspects
of these factors.

Table 1 provides a summary of Malaysia’s key economic indicators. Malaysia has been one of
the fastest growing economies in the world over the last few years. Early in 2008, Malaysia
experienced a sharp rise in inflation, but the inflationary pressures subsided as the impact of the
U.S. and E.U. economic slowdown affected Malaysia’s exports. Malaysia’s GDP and average per
capita income make it a market considerably larger than most of the countries that have recently

95 For a more general discussion of the potential trade effects of FTAs, see CRS Report RL31356, Free Trade
Agreements: Impact on U.S. Trade and Implications for U.S. Trade Policy, by William H. Cooper.
96 Office of the U.S. Trade Representative. “United States and Malaysia Sign Trade and Investment Framework
Agreement.” Press Release. May 10, 2004.
97 See World Trade Organization discussion of the Information Technology Agreement at
98 Wenk, Christopher. Testimony on the Proposed United States-Malaysia Free Trade Agreement For the Trade Policy
Staff Committee, Office of the U.S. Trade Representative. May 3, 2006.

negotiated free trade agreements with the United States. At official exchange rates, the per capita
income in 2007 was $6,724, but its purchasing power parity was estimated by the World Bank at 99
$13,570 – higher than Argentina, Chile, and Mexico.
Table 1. Selected Indicators for the Malaysian Economy
2007 2008 (est.) 2009 (proj.)
Real GDP Growth 6.3% 6.3% 6.0%
Nominal GDP ($ billion) 186.7 223.7 209.9
Per Capita Income $6,724 $7,898 $7,308
Inflation Rate - CPI 2.0% 5.5% N.A.
Inflation Rate - PPI 6.7% 10.4% N.A.
Unemployment Rate 3.2% 3.5% 3.2%
Exports ($ billion) 176.0 206.6 179.5
Imports ($ billion) 146.9 170.5 155.2
Source: Malaysian Economy, Ministry of Finance, December 2008.
According to Malaysia’s Ministry of Finance, the United States is its largest trading partner and
largest foreign investor. According to U.S. trade figures, Malaysia was the tenth largest trading
partner of the United States in 2007. The United States exported more to Malaysia in the first 11
months of 2008 than it did to Colombia or Peru, two other nations with pending FTAs with the
United States. For the first 10 months of 2008, U.S. investment in Malaysia totaled $1.8 billion—100
the second greatest source of foreign investment in Malaysia, after Australia.

FTAs usually have several distinct effects on trade flows. They tend to divert export and import
trade toward the countries involved, but they also can create more trade overall by lowering
tariffs and other trade barriers. FTAs also can cause a substitution effect as imports are substituted
for domestic production. In that case, import-competing industries may suffer and may request
assistance to adjust to increased competition from imports.
. shows U.S. exports to, imports from, and the balance of merchandise trade with Malaysia from
2000 to 2007, according to the U.S. Department of Commerce and Malaysia’s Department of
Statistics. According to the United States, U.S. exports to Malaysia remained steady at about $10
billion per year from 2000 to 2005, but rose to over $12.5 billion in 2006 and then declined to
$11.7 billion in 2007. U.S. imports from Malaysia grew from 2001 to 2006, but then declined in

99 Purchasing power parity estimates of per capita GDP attempt to revalue official GDP figures by comparing the
relative costs of a select group of goods in each nation and then recalculating per capita GDP to reflect the relative
purchasing power in each nation.
100 Source: Malaysia Industrial Development Authority Figure includes approved projects.

2007. From 2001 to 2006, the U.S. bilateral trade deficit with Malaysia widened by 63.5%, but
narrowed by 10.7% in 2007.
Table 2. U.S. Trade with Malaysia, 2000 to 2007
(Billion U.S. Dollars)
U.S. Data Malaysian Data
Year U.S. Malaysian Trade Malaysian U.S. Trade
Exports Imports Balance Exports Imports Balance
2000 10.957 25.568 -14.611 20.155 13.648 6.507
2001 9.358 22.340 -12.982 17.808 11.800 6.008
2002 10.344 24.009 -13.665 18.816 13.079 5.737
2003 10.914 25.440 -14.526 17.791 12.195 5.596
2004 10.922 28.179 -17.257 23.564 15.239 8.325
2005 10.461 33.685 -23.224 27.743 14.768 12.975
2006 12.544 36.533 -23.989 30.187 16.422 13.765
2007 11.680 32.629 -20.949 27.513 15.927 11.586
Source: U.S. Department of Commerce and Malaysia Department of Statistics via World Trade Atlas
According to Malaysia, its exports to the United States rose from just over $20 billion in 2000 to
about $30 billion in 2006—an increase of nearly 50%—and then slipped to $27.5 billion 2007.
Over the same time period, Malaysia’s imports from the United States rose 20% from $13.6
billion in 2000 to $16.4 billion in 2006 and then declined by nearly $500 million in 2007.
Malaysia’s resulting trade surplus with the United States was $6.5 billion in 2000 and $11.6
billion in 2006—roughly $8-$10 billion less than the U.S. figures. For more detailed information
on U.S. trade with Malaysia, see Appendices D, E and F.
As shown in Table 3. , the United States is Malaysia’s top export market, according to Malaysian
export data. Singapore is second, Japan is third, and China is fourth. Over the last three years, the
portion of Malaysia’s exports going to the United States has declined from 19.7% to 15.6%.
China’s share over the same period rose from 6.6% to 8.8%.
Table 3. Malaysia’s Merchandise Exports by Top Five Trading Partners
(Billion U.S. Dollars)
Partner 2005 2006 2007
World Total 140.979 160.845 176.311
United States 27.743 30.187 27.513
Singapore 22.009 24.757 25.786
Japan 13.181 14.249 16.099
China 9.303 11.735 15.461
Thailand 7.585 8.506 8.735
Source: Department of Statistics, Malaysia via Global Trade Atlas

As shown in Table 4. , Japan has been and remains Malaysia’s top source of imports, while the
United States has slid from second to fourth since 2005. Over the last two years, both China and
Singapore overtook the United States as a supplier of imported goods for Malaysia, with China
edging close to Japan.
Table 4. Malaysia’s Merchandise Imports by Top Five Trading Partners
(Billion U.S. Dollars)
Partner 2005 2006 2007
World Total 114.626 131.223 147.065
Japan 16.634 17.347 19.096
China 13.177 15.896 18.919
Singapore 13.425 15.338 16.879
United States 14.768 16.422 15.927
Taiwan 6.331 7.161 8.354
Source: Department of Statistics, Malaysia via Global Trade Atlas
In Asia, Malaysia already has FTAs with Japan and Singapore and is negotiating FTAs with
Australia, India, New Zealand, and Pakistan. Meanwhile, China has signed an FTA with ASEAN,
to which Malaysia is a member, which includes a trade in services agreement that went into force
as of July 2007. The proposed FTA with the United States would place U.S. exporters on similar
footing as exporters from China, Japan, and Singapore—Malaysia’s other leading trading
According to current U.S. data, Malaysia is not and has not been a major services trading partner
for the United States (see Table 5. ). Total services trade with Malaysia amounted to less than $2
billion per year from 2000 to 2004, and just climbed above $2 billion in 2005. When compared to
the total value of U.S. services trade, Malaysia’s relatively small role in overall services trade
becomes apparent. Even at its peak, Malaysia represented less than half a percent of the U.S.
services export market and provided less than a third of a percent of the U.S. services imports.
Despite the relatively small current volume of services trade with Malaysia, several U.S. service
sectors—including telecommunications, financial services, and insurance providers—have
expressed strong interest in obtaining improved access to Malaysia’s domestic market.
Table 5. U.S. Services Trade with Malaysia and the World
(Billion U.S. Dollars)
2000 2001 2002 2003 2004 2005 2006 2007
Exports 1.118 1.193 1.167 1.218 1.187 1.438 1.623 1.890 Malaysia
Imports 0.387 0.525 0.493 0.514 0.611 0.721 0.840 1.020
Exports 284.027 272.814 279.561 290.217 336.332 368.496 415.321 479.980 World
Imports 207.392 204.074 209.048 221.938 258.147 279.486 313.865 341.126

2000 2001 2002 2003 2004 2005 2006 2007
Exports 0.394% 0.437% 0.417% 0.420% 0.353% 0.390% 0.391% 0.394% Malaysia’s
Share Imports 0.187% 0.257% 0.236% 0.232% 0.237% 0.258% 0.268% 0.299%
Source: U.S. Bureau of Economic Analysis
The United States already is Malaysia’s top export market for merchandise goods. A U.S.-
Malaysia FTA would likely reinforce this relationship. Similarly, the discussed FTA would offer
better access to U.S. services providers to Malaysia’s domestic market.
According to the U.S. Bureau of Economic Analysis, U.S. companies by 2007 had invested over
$15 billion in Malaysia (see Table 6. ). About 38% of U.S. investments in Malaysia was in the
manufacturing sector, with investments in computer and electronic equipment manufacturing
facilities accounting for over three-quarters of the manufacturing investments. Also within
manufacturing investments, U.S. companies have shown a growing interest in chemical
manufacturing operations in Malaysia.
Table 6. U.S. Foreign Direct Investment in Malaysia, 2000-2007
(Million U.S. Dollars)
Manufacturing - Manufacturing -
Year TOTAL Manufacturing - Total Computers and Chemical
Electronic Equipment
2000 7,910 5,028 4,385 250
2001 7,489 5,006 4,322 203
2002 7,101 3,060 2,370 195
2003 7,057 3,213 2,404 255
2004 8,909 4,075 2,801 720
2005 11,097 4,670 3,316 791
2006 12,557 4,581 3,130 839
2007 15,699 5,933 4,451 889
Source: U.S. Bureau of Economic Analysis.
According to the Malaysian Industrial Development Authority (MIDA), U.S. companies obtained
approval for 33 manufacturing projects worth $878 million in 2007 and 19 projects worth $1.8
billion in the first 10 months of 2008. MIDA reported that most of the U.S. investment has been
in the electronic equipment industry and the chemical industry, indicating a continued focus of
U.S. investors in those two sectors.

When the talks began, the USTR’s goal was to have the U.S.-Malaysia FTA implementing bill
considered by Congress under “fast track” expedited procedures of the Bipartisan Trade

Promotion Authority (TPA) Act of 2002 (P.L. 107-210).101 However, the statute requires the
President to notify Congress of his intention to enter into the agreement at least 90 calendar days
before entering into the trade agreement. Since the President’s Trade Promotion Authority expired
on July 1, 2007, and the President did not notify the Congress by the April 2, 2007 deadline, the
U.S.-Malaysia FTA became ineligible to be considered under the 2002 TPA.
As a result, there are several possible scenarios under which a proposed FTA with Malaysia might
be considered by Congress. First, if Congress were to extend, renew or revise Trade Promotion
Authority, then the U.S.-Malaysia FTA might be considered under the provisions of a new TPA
law. Second, Congress could choose to pass legislation providing temporary or limited TPA for
the proposed U.S.-Malaysia FTA. This approach was used when Congress considered the
Uruguay Round Agreements. Third, Congress could consider the proposed U.S.-Malaysia FTA
without TPA, as it did with the U.S.-Jordan FTA. However, consideration of the proposed FTA
with Malaysia without TPA would potentially allow Congress to amend the implementing bill in
ways that could modify the terms of the trade agreement.
In the meantime, while negotiations with Malaysia on the proposed FTA are incomplete, the
legislative policy options include consultations with the Executive Branch, holding oversight
hearings on pertinent U.S. trade policy and relations with Malaysia and other nations, and
working with interest groups that either support or oppose the proposed agreement. P.L. 107-210
(Section 2104) provides for close consultations with the Executive Branch during and following
the negotiations. Such consultations could lead to changes in the draft agreement before it is

101 For more detailed information about trade promotion authority, see CRS Report RL33743, Trade Promotion
Authority (TPA): Issues, Options, and Prospects for Renewal, by J. F. Hornbeck and William H. Cooper.

Source: Map Resources. Adapted by CRS.

July 14-18 Eighth Round of Talks held in Washington, DC
January 14 Seventh Round of Talks held in Kuala Lumpur, Malaysia
April 13 Informal Sixth Round of Talks held in Washington, DC.
March 7 Malaysian Cabinet meet to discuss 58 outstanding issues in the FTA negotiations.
February 5 Fifth Round of Talks begin in Kota Kinabalu, Sabah, Malaysia.
January 8 Fourth Round of Talks begin in San Francisco.
December 27 The Administration reports that it is not likely to ask Congress to substantially
change U.S. import laws (trade remedies laws) due to negotiations on a free trade
agreement with Malaysia.
October 30 Third Round of Talks commences in Malaysia. Government procurement is a major
point of contention.
September 18 Third Round of Talks scheduled for September are postponed to October 30.
July 17-21 The Second Round of Talks is held. Twenty-two negotiating groups met and
discussed issues and draft texts.
June 12-14 The First Round of the Malaysia-US FTA Talks are held in Malaysia.
May 3 The interagency Trade Policy Staff Committee convenes a public hearing to seek
public comment to assist the USTR in amplifying and clarifying negotiating objectives
for the proposed U.S.-Malaysia FTA and to provide advice on how specific goods
and services and other matters should be treated under the proposed agreement.
The U.S. International Trade Commission began hearings on the proposed U.S.
Malaysia FTA.
April 4 The U.S. Trade Representative sends a letter to the Committee on Ways and Means
transmitting a report on the intent to initiate negotiations for a free trade
agreement between the United States and Malaysia.
March 31 The Trade Policy Staff Committee gives notice that the U.S. Trade Representative
and the Department of Labor are initiating a review of the impact of a proposed
free trade agreement between the United States and Malaysia on U.S. employment,
including labor markets.
March 30 The U.S. International Trade Commission announces that it instituted (as of March
24) investigation [Nos. TA-131-33 and TA-2104-22] entitled U.S.-Malaysia Free Trade
Agreement: Advice Concerning the Probable Economic Effect of Providing Duty-Free
Treatment for Imports. The request for the investigation was received from the USTR
on March 17, 2006.
March 8 The U.S. Trade Representative announces and notifies Congress of the Bush
Administration’s intent to negotiate a free trade agreement between the United
States and Malaysia.

102 This chronology is based on various news reports, press releases, and notifications.

Measuring the degree of protection provided by tariff barriers is a complicated process, since each
country has thousands of products each with a tariff rate that depends on the category of exporter.
Average rates, therefore, will differ depending on how they are calculated. The two types of
averages most often cited are the most favored nation (MFN) rates and the average applied rates.
The MFN rates apply to most countries and all members of the World Trade Organization. U.S.
exporters face these rates unless they have been reduced by a special arrangement, such as the 103
Generalized System of Preferences or the Information Technology Agreement. The average
MFN rates are simple averages of all tariff lines. On an MFN basis, Malaysia’s average tariff rate
at 8.1% is higher than the 4.8% of the United States . shows the average and range of U.S. and
Malaysian MFN tariff rates by major commodity category as classified under the Harmonized 104
System. Both the United States and Malaysia have peaks in tariff rates on certain products.
Malaysia and the United States each protects its agricultural sector. Although Malaysia’s average
MFN tariff rate for agricultural products at 3.2% is lower than the 9.7% of the United States,
Malaysia maintains high rates on items of interest to U.S. agriculture. The Malaysian tariff rate
for grains averages 15.2% and rice is at 40%, oranges and apples at 15% to 20%, and wheat flour
at 96%. Prepared food is subject to tariffs of 5% to 30%. Beef enters the country at 15%, but pork
faces a 139% tariff and ham 168%. The tariff is 25% on yogurt, 10 to 25% on chocolate products,
and 20% on baby food. For the United States, the upper range for agricultural products is a 350%
tariff on imports of tobacco products that exceed the import quota. Tobacco products within the
quota face a 12.1% tariff rate. In recent years, the tobacco quota has not been filled, so the 350%
rate has not been applied.
Table C-1. Average and Range of Malaysian and U.S. Most Favored Nation Tariff
Malaysia’s Tariff Rates (2006) U.S. Tariff Rates (2004)
No. of Average Range No. of Average Range
Lines (%) (%) lines (%) (%)
Total 10,581 8.1 0-60 10,253 4.8 0-350
Agricultural products 1,202 3.2 0-40 1,595 8.9 0-350
Live animals and products
thereof 142 0.8 0-20 139 4.2 0-100
Dairy products 40 6.1 0-25 166 21.4 0-177.2
Coffee and tea, cocoa, sugar, etc. 209 4.1 0-25 315 9.7 0-90.7

103 Malaysia does not qualify for GSP treatment.
104 Based on the most current World Trade Organization Trade Policy Reviews for Malaysia and the United States.

Malaysia’s Tariff Rates (2006) U.S. Tariff Rates (2004)
No. of Average Range No. of Average Range
Lines (%) (%) lines (%) (%)
Cut flowers and plants 46 0.0 0-0 57 1.7 0-6.8
Fruit and vegetables 302 3.9 0-30 439 6.3 0-131.8
Grains 21 15.2 0-40 21 1.6 0-11.2
Oils seeds, fats, oil and their
products 197 2.0 0-20 95 6.3 0-163.8
Beverages and spirits 81 6.4 0-30 100 4.8 0-151.8
Tobacco 19 5.0 5-5 47 56.0 0-350
Other agricultural products,
n.e.s. 145 1.3 0-25 216 2.0 0-35
Non-agricultural products
(excl. petrol.) 9,349 8.7 0-60 8,658 4.0 0-63.9
Fish and fishery products 188 3.2 0-20 201 2.0 0-35
Mineral products, precious
stones, etc. 416 10.4 0-60 540 3.5 0-38
Metals 1,061 17.5 0-50 1,015 1.9 0-23.8
Chemicals and photographic
supplies 1,481 5.1 0-50 1,833 3.7 0-6.5
Leather, rubber, footwear, travel
goods 397 13.1 0-40 397 7.3 0-63.9
Wood, pulp, paper and furniture 2,370 2.5 0-40 526 0.7 0-14
Textiles and clothing 1,176 12.6 0-30 1,659 9.1 0-42.1
Transport equipment 461 25.8 0-50 242 2.5 0-25
Non-electric machinery 735 6.3 0-35 790 1.4 0-9.9
Electric machinery 438 9.5 0-50 529 2.2 0-15
Non-agric products, n.e.s. 626 6.3 0-50 888 3.0 0-35.8
Petroleum 30 0.5 0-5 28 2.2 0-7
By sectora
-Agriculture and fisheries 1,655 0.4 0-40 488 5.5 0-350
-Mining 124 1.0 0-30 116 0.3 0-10.5
-Manufacturing 8,801 9.6 0-60 9,648 4.8 0-350
-excluding food processing 7,904 10.2 0-60
By stage of processing
First stage of processing 2,054 0.9 0-40 959 3.7 0-350
Semi-processed products 3,482 9 0-60 3,418 4.2 0-83.8
Fully-processed products 5,045 10.4 0-60 5,876 5.3 0-350
Source: World Trade Organization calculations, based on data provided by the Malaysian and U.S. authorities.
See Trade Policy Review—Report by Malaysia, WT/TPR/G/156, December 12, 2005, and Trade Policy Review—Report
by the United States, WT/TPR/S/200, June 9 & 11, 2008.

Note: Calculations exclude specific rates and include the ad valorem part of alternate and compound rates. The
tariff is based on HS02 nomenclature. The number of lines refers to the number of individual lines in the list of
tariffs for each country.
a. International Standard Industrial (Rev.2) classification. Electricity, gas, and water are excluded.
In non-agricultural products (excluding petroleum), Malaysia’s average MFN tariff rate is 8.7%
as compared with 4.0% in the United States. The ranges of tariff rates are similar. In Malaysian
sectors where the government is fostering the growth of industry, however, the rates are
particularly high. For transport equipment, the average Malaysia tariff of 25.6% is more than ten
times the U.S. rate of 2.5%. For non-electrical machinery, a sector in which both countries
currently export to each other, the Malaysia tariff rate at 6.3% is over four times the U.S. rate of
1.4%. Similarly, in electrical machinery the Malaysia rate of 9.2% is much higher the U.S. rate of


Applied average tariff rates are derived by dividing the amount of customs duties collected by the
value of imports. Average applied tariff rates are frequently used indicators of a nation’s actual
level of tariff protection. These rates may be somewhat lower than the MFN rates because items
with high rates might not be imported at all (so no tariffs are paid) and because a nation may have
special trade arrangements with other nations under which the partners pay lower or no tariffs on
their exports. They can also be higher if importers buy expensive items (such as machinery or
automobiles) subject to higher tariff rates.
For Malaysia, the average applied tariff rate of 8.4% in 2006 was more than twice the U.S. 105
average rate of 3.7%. For all industrial goods, the applied rate is 9.1% in Malaysia as compared
with 3.7% in the United States . shows Malaysian applied tariff rates for selected industrial
Table C-2. U.S. and Malaysian Average Applied Tariffs Rates for Industrial Goods -
Industrial Category Malaysia United States
All Industrial Goods 9.1% 3.7%
Wood, pulp, paper, and furniture 10.9% 0.7%
Textiles and clothing 13.5% 9.6%
Leather, rubber, footwear, and travel goods 14.0% 4.3%
Metals 9.3% 2.1%
Chemicals and photographic supplies 3.6% 3.4%
Transport equipment 18.5% 3.2%
Non-electric machinery 3.7% 1.2%
Electric machinery 6.7% 1.9%

105 Office of the United States Trade Representative.Free Trade Agreement: U.S. and Malaysia, Economic and
Strategic Benefits.” Power Point presentation. March 8, 2006.

Industrial Category Malaysia United States
Mineral products and precious stones 8.8% 2.0%
Manufactured articles not specified 5.1% 2.5%
Fish and fish products 2.4% 1.1%
Source: U.S. Trade Representative. “Free Trade Agreement: U.S. and Malaysia, Economic and Strategic
Benefits,” March 8, 2006.

(US$ Million; FAS value)
Description 2005 2006 2007
Total Exports to Malaysia 10,450.9 12,550.1 11,680.2
01 Live Animals 2.3 2.4 3.6
02 Meat 3.3 2.0 3.8
03 Fish and Seafood 3.0 6.0 8.6
04 Dairy, Eggs, Honey, etc 33.5 48.7 96.4
05 Other of Animal Origin 0.2 0.3 0.5
06 Live Trees and Plants 0.0 0.0 0.0
07 Vegetables 5.5 6.2 7.3
08 Edible Fruit and Nuts 117.6 94.3 57.4
09 Spices, Coffee and Tea 0.8 0.8 0.4
10 Cereals 29.8 23.5 76.3
11 Milling; Malt; Starch 1.5 1.6 2.2
12 Misc Grain, Seed, Fruit 26.2 58.8 119.5
13 Lac; Vegetable Sap, Extract 2.1 1.9 3.5
14 Other Vegetable 0.0 0.0 0.1
15 Fats and Oils 1.7 2.6 2.1
16 Prepared Meat, Fish, etc 1.0 0.8 1.7
17 Sugars 7.2 9.6 13.1
18 Cocoa 4.9 3.3 3.7
19 Baking Related 5.2 4.5 4.9
20 Preserved Food 23.2 24.3 32.6
21 Miscellaneous Food 46.7 48.8 52.6
22 Beverages 4.0 5.8 8.5
23 Food Waste; Animal Feed 37.2 39.2 45.5
24 Tobacco 27.9 21.1 14.3
25 Salt; Sulfur; Earth, Stone 4.5 8.7 8.1
26 Ores, Slag, Ash 4.0 5.0 5.0
27 Mineral Fuel, Oil Etc 30.3 42.6 55.3
28 Inorg Chem; Rare Earth mt 61.9 73.5 77.5
29 Organic Chemicals 113.1 107.0 121.2
30 Pharmaceutical Products 29.9 39.4 31.8
31 Fertilizers 6.0 5.5 8.9

32 Tanning, Dye, Paint, Putty 20.3 17.2 19.8
33 Perfumery, Cosmetic, etc 29.7 37.0 41.2
34 Soap, Wax, Etc; Dental Prep 27.7 32.6 30.3
35 Albumins; Mod Starch; Glue 8.0 10.7 15.5
36 Explosives 3.6 3.7 6.4
37 Photographic/Cinematography 4.6 4.2 8.3
38 Misc. Chemical Products 76.8 73.8 115.2
39 Plastic 222.2 208.4 230.6
40 Rubber 34.1 45.4 43.0
41 Hides and Skins 0.1 0.1 0.3
42 Leather Art; Saddlery; Bags 2.6 3.0 3.8
43 Furskin+ Artificial Fur 0.0 0.0 0.1
44 Wood 30.1 29.7 33.0
45 Cork 0.1 0.0 0.0
46 Straw, Esparto 0.0 0.0 0.0
47 Woodpulp, Etc. 26.4 28.1 34.9
48 Paper, Paperboard 71.7 67.5 83.8
49 Book+ Newspaper; Manuscript 20.1 18.3 21.0
50 Silk; Silk Yarn, Fabric 0.3 0.5 0.1
51 Animal Hair+ Yarn, Fabric 0.0 0.0 0.0
52 Cotton+ Yarn, Fabric 5.4 8.5 10.2
53 Other Vegetable Textile Fiber 0.0 0.0 0.0
54 Manmade Filament, Fabric 4.0 2.8 4.8
55 Manmade Staple Fibers 2.5 2.9 2.3
56 Wadding, Felt, Twine, Rope 14.7 7.0 8.2
57 Textile Floor Coverings 0.2 0.5 0.5
58 Special Woven Fabric, Etc 0.5 1.0 1.5
59 Impregnated Text Fabrics 3.9 2.9 3.3
60 Knit, Crocheted Fabrics 0.3 0.1 0.2
61 Knit Apparel 0.8 0.3 1.3
62 Woven Apparel 2.4 1.4 2.2
63 Misc Textile Articles 7.0 9.6 9.1
64 Footwear 0.8 0.7 0.7
65 Headgear 0.3 0.3 0.2
66 Umbrella, Walking-sticks, Etc 0.0 0.0 0.0
67 Artificial Flowers, Feathers 0.0 0.0 0.1
68 Stone, Plaster, Cement, Etc 11.7 16.4 16.0
69 Ceramic Products 9.5 4.3 11.3

70 Glass and Glassware 27.0 30.4 32.6
71 Precious Stones, Metals 37.1 48.9 57.6
72 Iron and Steel 121.3 211.8 411.7
73 Iron/steel Products 28.0 33.0 40.2
74 Copper+ Articles Thereof 27.4 30.0 29.6
75 Nickel+ Articles Thereof 3.0 4.0 7.1
76 Aluminum 43.5 43.4 66.2
78 Lead 4.4 3.0 0.1
79 Zinc+articles Thereof 0.6 1.8 2.2
80 Tin + Articles Thereof 0.1 6.8 2.4
81 Other Base Metals, etc. 7.8 17.0 22.3
82 Tools, Cutlery, of Base Metals 22.5 28.3 38.5
83 Misc Art of Base Metal 8.6 10.0 7.8
84 Machinery 1,744.8 1,687.3 1,709.5
85 Electrical Machinery 5,985.7 7,131.2 6,320.9
86 Railway; Trf Sign eq 5.5 3.4 3.4
87 Vehicles, Not Railway 15.8 13.7 17.1
88 Aircraft, Spacecraft 255.8 807.3 320.2
89 Ships and Boats 10.5 1.2 1.5
90 Optic, not 8544; Medical Instr 567.8 834.5 690.9
91 Clocks and Watches 1.3 0.9 1.2
92 Musical Instruments 1.2 1.9 1.5
93 Arms and Ammunition 1.3 2.2 4.8
94 Furniture and Bedding 29.8 13.7 10.7
95 Toys and Sports Equipment 19.2 19.6 17.4
96 Miscellaneous Manufactures 2.5 6.3 6.4
97 Art and Antiques 0.2 0.4 3.8
98 Special Other 201.4 231.2 226.7
Source of data: U.S. International Trade Commission.

(U.S.$ Millions, CIF values)
HS Description 2005 2006 2007
Total Imports from Malaysia 34,675.8 37,521.1 32,628.5
01 Live Animals 0.2 0.1 0.2
02 Meat 0.0 0.0 0.0
03 Fish and Seafood 130.2 152.5 142.3
04 Dairy, Eggs, Honey, etc 0.8 0.3 2.7
05 Other of Animal Origin 0.1 0.1 0.1
06 Live Trees and Plants 0.8 0.8 0.7
07 Vegetables 0.3 0.1 0.0
08 Edible Fruit and Nuts 0.0 0.0 0.0
09 Spices, Coffee and Tea 1.8 3.6 3.8
10 Cereals 0.0 0.1 0.0
11 Milling; Malt; Starch 0.2 0.0 0.1
12 Misc. Grain, Seed, Fruit 0.2 0.3 0.0
13 Lac; Vegetable Sap, Extract 0.2 0.3 0.3
14 Other Vegetable 0.0 0.0 0.0
15 Fats and Oils 343.3 458.0 679.4
16 Prepared Meat, Fish, etc 18.3 21.7 34.5
17 Sugars 1.1 0.7 1.2
18 Cocoa 117.6 113.8 121.4
19 Baking Related 11.1 11.5 11.7
20 Preserved Food 9.4 8.4 10.2
21 Miscellaneous Food 9.6 22.7 39.7
22 Beverages 4.2 6.7 3.2
23 Food Waste; Animal Feed 0.7 4.2 7.4
24 Tobacco 1.0 0.0 0.0
25 Salt; Sulfur; Earth, Stone 0.2 0.2 0.1
26 Ores, Slag, Ash 9.5 10.7 8.2
27 Mineral Fuel, Oil Etc 549.7 457.8 424.6
28 Inorg Chem; Rare Earth mt 14.6 3.7 8.1
29 Organic Chemicals 108.0 94.5 109.3
30 Pharmaceutical Products 1.1 2.8 3.3

HS Description 2005 2006 2007
31 Fertilizers 13.4 14.7 16.4
32 Tanning, Dye, Paint, Putty 17.7 14.7 13.1
33 Perfumery, Cosmetic, etc 3.9 4.5 5.6
34 Soap, Wax, Etc; Dental Prep 21.6 25.3 23.8
35 Albumins; Mod Starch; Glue 0.7 0.6 0.4
36 Explosives 0.0 0.0 0.0
37 Photographic/Cinematography 1.5 3.3 0.7
38 Misc. Chemical Products 184.7 218.1 304.7
39 Plastic 153.3 187.6 162.8
40 Rubber 728.8 866.0 839.2
41 Hides and Skins 0.1 0.3 0.4
42 Leather Art; Saddlery; Bags 5.5 12.0 11.1
43 Furskin+ Artificial Fur 0.0 0.0 0.0
44 Wood 402.0 433.5 339.9
45 Cork 0.0 0.0 0.1
46 Straw, Esparto 0.2 0.0 0.0
47 Woodpulp, Etc. 0.0 0.0 0.0
48 Paper, Paperboard 19.4 19.8 27.9
49 Book+ Newspaper; Manuscript 22.5 21.9 26.7
50 Silk; Silk Yarn, Fabric 0.0 0.0 0.0
51 Animal Hair+ Yarn, Fabric 0.6 0.3 0.4
52 Cotton+ Yarn, Fabric 13.1 11.9 3.5
53 Other Vegetable Textile Fiber 0.0 0.0 0.0
54 Manmade Filament, Fabric 18.0 18.4 19.0
55 Manmade Staple Fibers 3.2 11.0 7.4
56 Wadding, Felt, Twine, Rope 12.5 12.5 9.1
57 Textile Floor Coverings 0.1 0.2 0.0
58 Special Woven Fabric, Etc 2.2 3.3 1.3
59 Impregnated Text Fabrics 0.6 0.6 0.6
60 Knit, Crocheted Fabrics 0.0 0.1 0.2
61 Knit Apparel 462.2 459.2 447.2
62 Woven Apparel 274.7 283.4 255.6
63 Misc Textile Articles 8.3 6.0 6.3
64 Footwear 1.8 2.7 2.6
65 Headgear 3.5 3.1 2.4
66 Umbrella, Walking-sticks, Etc 0.0 0.0 0.0
67 Artificial Flowers, Feathers 0.0 0.0 0.0

HS Description 2005 2006 2007
68 Stone, Plaster, Cement, Etc 5.3 2.8 6.3
69 Ceramic Products 38.1 36.8 27.8
70 Glass and Glassware 6.8 9.8 9.7
71 Precious Stones, Metals 30.3 30.5 23.7
72 Iron and Steel 143.7 323.5 159.0
73 Iron/steel Products 88.2 123.8 123.2
74 Copper+ Articles Thereof 57.5 107.3 123.1
75 Nickel+ Articles Thereof 0.0 0.4 0.7
76 Aluminum 54.5 38.4 33.6
78 Lead 0.0 0.0 0.0
79 Zinc+articles Thereof 1.6 1.0 0.7
80 Tin + Articles Thereof 16.3 4.3 2.2
81 Other Base Metals, etc. 0.0 2.2 0.3
82 Tools, Cutlery, of Base Metals 5.7 5.1 8.1
83 Misc Art of Base Metal 23.0 22.5 25.1
84 Machinery 13,130.8 15,229.2 14,347.9
85 Electrical Machinery 15,050.6 14,927.4 10,940.7
86 Railway; Trf Sign eq 0.4 0.9 0.5
87 Vehicles, Not Railway 30.2 32.6 33.9
88 Aircraft, Spacecraft 21.2 27.8 37.1
89 Ships and Boats 20.7 30.3 19.5
90 Optic, not 8544; Medical Instr 630.8 781.9 957.8
91 Clocks and Watches 7.0 1.9 1.6
92 Musical Instruments 2.3 2.0 2.2
93 Arms and Ammunition 0.4 0.5 0.5
94 Furniture and Bedding 914.7 993.8 829.7
95 Toys and Sports Equipment 109.9 96.8 95.0
96 Miscellaneous Manufactures 26.1 26.4 19.5
97 Art and Antiques 0.2 0.5 0.3
98 Special Other 301.4 376.2 412.9
99 Other Special Impr Provisions 247.9 273.6 244.9
Source of data: U.S. International Trade Commission

(U.S. Dollars)
State 2005 2006 2007
U.S. Total 10,460,833,167 12,544,269,310 11,680,201,598
Alabama 24,435,439 32,055,731 40,770,615
Alaska 1,813,626 2,110,093 3,348,500
Arizona 778,629,396 807,955,375 539,240,114
Arkansas 12,036,780 12,353,817 18,627,221
California 1,943,023,872 2,512,950,444 2,206,103,264
Colorado 246,103,616 242,375,536 206,722,451
Connecticut 115,115,730 155,261,689 204,818,869
Delaware 12,072,472 12,631,167 12,246,911
District of Columbia 6,053,657 4,385,022 4,923,895
Florida 231,852,408 173,138,280 174,820,666
Georgia 84,644,356 63,846,193 110,886,79
Hawaii 7,930,844 8,729,921 15,738,207
Idaho 150,111,154 152,678,546 124,308,415
Illinois 233,327,516 321,290,525 335,160,263
Indiana 75,658,664 84,684,105 112,639,142
Iowa 34,433,982 36,166,670 42,070,562
Kansas 43,925,781 31,365,428 34,254,656
Kentucky 105,575,397 104,453,457 178,508,976
Louisiana 98,810,927 93,280,926 219,286,94
Maine 364,620,488 673,323,738 723,770,235
Maryland 20,553,856 21,151,523 25,459,669
Massachusetts 617,627,876 535,218,544 521,805,171
Michigan 77,665,312 61,516,319 69,402,444
Minnesota 185,472,723 188,188,446 185,374,766
Mississippi 7,761,611 9,551,863 13,308,966
Missouri 53,093,743 49,591,784 43,202,476
Montana 7,295,218 5,299,170 4,377,357
Nebraska 7,694,801 10,251,464 13,227,045
Nevada 36,542,586 67,638,870 37,579,984
New Hampshire 23,779,985 31,678,258 22,499,579
New Jersey 79,896,927 63,316,264 119,072,228

State 2005 2006 2007
New Mexico 342,690,777 490,070,276 477,400,891
New York 239,245,648 261,717,799 322,290,703
North Carolina 182,575,269 141,852,400 108,657,728
North Dakota 1,042,341 835,254 2,240,582
Ohio 119,261,745 83,616,979 112,772,995
Oklahoma 16,758,186 14,238,542 20,995,371
Oregon 914,985,840 1,215,312,164 1,076,571,892
Pennsylvania 169,575,146 181,442,354 188,153,313
Puerto Rico 23,768,292 16,792,176 12,282,140
Rhode Island 15,174,078 10,424,503 7,425,644
South Carolina 71,623,429 67,769,659 85,415,229
South Dakota 6,527,987 4,783,698 4,821,835
Tennessee 128,517,281 165,627,371 164,562,019
Texas 1,755,450,547 1,952,913,193 1,734,022,474
Utah 152,665,498 175,923,709 159,118,224
Vermont 49,582,756 29,682,822 40,571,511
Virgin Islands 123,452,142 189,635,487 242,587,655
Virginia 120,041 6,680,464 40,347
Washington 86,315,944 57,529,454 66,446,859
West Virginia 213,893,793 757,660,121 333,733,049
Wisconsin 23,128,249 8,463,557 22,153,272
Wyoming 119,236,465 127,042,669 122,019,580
Unallocated 17,680,970 15,815,491 12,361,896
Source: World Trade Atlas.
Michael F. Martin
Analyst in Asian Trade and Finance, 7-2199